Growth in Singapore private sector slows in January, firms gloomy about year ahead: Nikkei PMI

The Singapore skyline with the Central Business District in the background.
The Singapore skyline with the Central Business District in the background.PHOTO: ST FILE

SINGAPORE - Growth in Singapore's private sector eased in January to its slowest in three months, according to a survey released on Friday (Feb 3).

Notably also, private sector businesses were pessimistic about output for the year ahead for the first time in the survey history, citing slowing economic conditions.

The headline Nikkei Singapore Purchasing Managers' Index stood at 51.6 in January, slightly down from 52.0 in December, and the lowest for three months.

Commenting on the data, Bernard Aw, economist at IHS Markit, which compiles the survey, said: "Growth in Singapore's private sector was sustained at the start of 2017, with further expansions in both output and new orders reported, albeit at slower growth rates. However, there were a number of worrying developments for the Republic.

"For the first time in the survey history, private sector businesses in Singapore expressed pessimism about their 12-month outlook for output because of slowing economic conditions, according to the future output index. Weak business confidence has affected employment trends. While increases in both permanent and temporary employment boosted job growth in January, panellists reveal that much of the growth is centred in part-time hiring."

Mr Aw also noted that the growth in export orders slowed markedly in January, "which cast doubts on the recent strong growth numbers in official export data."

"If new business from abroad slows or even decline in the months ahead amid growing uncertainty about global trade policy, Singapore's economic growth could be affected," he said.

According to the Nikkei Singapore PMI data, input cost inflation for businesses was steepest in around three years during January, which led to the sharpest increase in prices charged at Singapore's private sector firms on record.

Said Mr Aw: "Singaporean consumers should be concerned about rising inflationary pressures. Prices for Singapore's products and services have become more and more expensive as firms passed on higher costs to consumers."

The latest Nikkei Singapore PMI comes after the release on Thusrday of a survey by an industry body which showed that conditions for Singapore's manufacturing industry improved further in January on growth in new orders and new exports. The manufacturing PMI rose for the fifth straight month to its strongest in more than two years.